Market overview and trends

The RWA (Real World Assets) market has seen impressive growth that exceeded any expectations, from its inception less than a decade ago to over $14B today (Forbes). As we look to 2025, RWA are becoming increasingly significant in decentralised finance (DeFi) platforms. The integration of RWAs offers a new dimension to DeFi, allowing it to transcend its cryptocurrency origins and anchor itself in tangible, physical assets that range from real estate to art, and more.

The incorporation of RWAs into DeFi platforms not only diversifies investment options but also enhances the stability of investments by tying them to physical assets whose value does not derive solely from market speculation, one of crypto’s downfalls in the last bull run. This shift is instrumental in broadening the appeal of DeFi to a more conservative investor base that values real world asset security over the typical digital asset volatility.

Looking forward, the role of RWAs in DeFi is set to expand significantly. Market trends indicate a growing acceptance of DeFi as a legitimate platform for investment in any asset class, including physical ones. This is expected to drive further innovation in the sector, including the development of more sophisticated mechanisms for price discovery, risk assessment, and liquidity provision in RWA markets. As these technologies mature, they will play a crucial role in shaping the future of both asset management and financial services, making RWAs a key area of growth within the DeFi ecosystem.

Several renowned firms are effectively leveraging Real World Assets (RWA) such as bonds, stocks, and gold:

• Euroclear and the World Gold Council have successfully tokenized gold, along with Gilts and Eurobonds

• Securrency in partnership with BNY Mellon, has tokenized parts of a money market fund, demonstrating the practical application of tokenization in traditional finance sectors, managing over $100 million in tokenized assets.

• Tokensoft has worked with Bitfinex to launch a security token offering for LEO, Bitfinex’s native token, showing how tokenization can facilitate capital raising in innovative ways.

• BlackRock has been actively engaging in the tokenization of Real World Assets (RWAs) through its USD Institutional Digital Liquidity Fund (BUIDL), which was launched on the Ethereum blockchain. BUIDL Fund focuses on cash, U.S. Treasury bills, and repurchase agreements, ensuring stability and regular yield payouts directly via blockchain, which exemplifies a significant advancement in digital asset management

• BlackRock has invested significantly in Securitize, a firm specializing in the tokenization of assets. This partnership underlines BlackRock’s commitment to advancing blockchain technology within traditional financial frameworks, reflecting a broader strategy to innovate and capture the growing potential of digital assets. Their collaboration is intended to streamline the issuance and lifecycle management of tokenized assets, enhancing the operational framework and compliance with existing regulations

RWAs will begin to make their way into DeFi platforms in 2025. Through a broader acceptance of DeFi as a legitimate, stable, and diversified investment platform, tokenization of assets like real estate, art, and bonds will enhance liquidity and accessibility into the asset classes, allowing investors from varied backgrounds to actively participate in previously inaccessible markets. This drastic increase in liquidity and tradability of tangible asset classes will convert them into cornerstones in financial portfolios.